Hopes pinned on Christmas trading

AUCKLAND: Research shows the Christmas trading period this year is more critical than ever for retailers and small businesses — and may mean the difference between survival and going under, research has found.

Fortythree percent of small businesses (SMEs) spoken to within the hospitality sector said they were concerned they would fail next year if the Christmas trading period did not meet their forecasts. This figure was 20% for those in retail.

These findings come from American Express’ small business recovery research, which found that the leadup to Christmas will be critical for 30% of New Zealand small businesses spoken to, and 71% of those in hospitality.

American Express New Zealand country manager Rob Bourne said the findings suggested that the Christmas period would be ‘‘make or break’’ for many New Zealand small businesses.

‘‘The pressure is particularly high for those who have been forced to lay off staff or who are trying to make up for significant losses from earlier in the year. Now, more than ever, if we want to see these small retailers survive, we all need to show our support by spending with them as often as we can,’’ Mr Bourne said.

Of the 500 small businesses surveyed, 58% said they were counting on shoppers to spend with them before Christmas as they recovered from the impacts of the Covid19 pandemic.

Of those surveyed, 74% said they expected the effects of the crisis to roll on beyond 2020, and 19% expected much longerlasting implications.

While about half of the SMEs said their customers had played a critical role in supporting them during the pandemic, only one in five felt their wider community had rallied around them.

Mr Bourne said the findings were concerning, and consumers needed to do more support struggling businesses.

‘‘This suggests that locals need to shop beyond their regular stores and rally together to do more for small businesses.’’

Aucklander Matt Nicholls, coowner of New Yorkinspired cocktail bar Bedford Soda & Liquor and Commercial Bay venues Public and Reign & Pour, said the past seven months of disruption had put significant pressure on the hospitality sector.

The allimportant Christmas trading period was much more important this year and would be centred around recouping lost revenue rather than traditionally bumper profits, he said.

Mr Nicholls’ Commercial Bay venues in downtown Auckland had felt the brunt of fewer people working in the CBD and consumers becoming cautious with spending after the second lockdown. Revenues were down about 25% on typical trading levels.

‘‘To have a year where you’ve got two months, and, in some instances, more of no trade whatsoever, many businesses — particularly small businesses — just can’t survive. Many haven’t already, and some are hanging out just to be able to see if the uplift in sales we get over Christmas period is enough to get them through,’’ he said.

‘‘In hospitality, this Christmas out of any other is the most important.

‘‘Everybody’s bank accounts are pretty low, and we’ve got to do our best to generate as much turnover as we can.’’

Trade in November and December could make up more than 35% of annual earnings, Mr Nicholls said. It was hard to know what the longterm impact of Covid19 would be, but he expected that the real effects of the recessionary environment would not be realised until the end of next year.

‘‘We came out of the first lockdown, and there was a real sense of pride that we had done it and got through it — coming out of the second one, there hasn’t been that spike in spending or celebration of us getting back into Level One.

‘‘People are now more conservative at the moment, and there is a real concern that if we go into another lockdown there will be a lot of hospitality businesses that just won’t be able to sustain it.

‘‘If we had a lockdown in December it would decimate the hospitality industry.’’

Analysts on Christmas retail A Forsyth Barr research report says spending in the eightweek period before Christmas ‘‘looks to be better than previously anticipated’’.

‘‘The retail sector is poised to positively surprise into Christmas, in our opinion. The housing market remains buoyant and is unlikely to reverse nearterm with tight inventory, low borrowing costs, and returning kiwis reentering the market. Interest rates at record lows also reduce the incentive to save, supportive of continued retail activity, particularly in the homeware segment,’’ analyst Guy Hooper said in the report.

‘‘The important Christmas trading period is approaching, and whilst there remains a high level of uncertainty, the health of the consumer appears better than previously expected. November and December represent 20% of annual core retail sales and a significant portion of company earnings.

‘‘Our view of the nearterm outlook has continued to improve following the gloom of lockdowns, as consumer activity proved to be resilient and economic indicators remained supportive. We think investors are best placed investing in retail categories exposed to favourable purchasing trends (e. g. homeware and outdoor gear), and companies backed by wellestablished brands with an attractive online offering.’’

Despite the positivity, Mr Hooper warned that the outlook of retail could sour heading into 2021 as ‘‘government support tapers off, and the economic realities become clearer’’. — The New Zealand Herald

❛ This suggests that locals need to shop beyond their regular stores and rally together to do more for small businesses

Rob Bourne